At today’s sitting, the Riigikogu concluded the second reading of the Bill on Amendments to the Income Tax Act, the Social Tax Act and Other Acts (302 SE), initiated by the Government. Altogether 157 motions to amend were reviewed.
Under this Bill, employers will have the possibility to compensate the costs incurred for the promotion of employees’ health to the extent of 100 euro in a quarter without it being taxed as a fringe benefit. The amendment will enter into force in 2018, and it will be established for a term of five years. The Bill will also ensure that the average pension is exempt from income tax in 2017. For that, the increased basic exemption for pensions will be raised to 2832 euro per year.
According to the Bill, the social tax exemption for sickness benefit paid for the second and third day of sick leave enters into force as of 1 January next year. For the purposes of equal treatment, the Bill extends the range of persons who are entitled to income tax exemption in the case of allowances and benefits paid when a regular official, assistant police officer, volunteer rescuer or person engaged in emergency situation work is killed or dies, or his or her work ability decreases.
At the sitting of the Riigikogu on 7 December, it was decided to introduce into the Bill amendments concerning the reform of basic exemption. The income tax rate will remain at 20 per cent. The general rate of basic exemption will raise to 500 euro per month as compared to the current 170 euro. The rate of basic exemption will however not be applied in the case of an income of 2100 euro or more per month. Tax exemptions related to children will remain in place in their current form.
As of 2018, the new system will also replace the refunding to the low-waged. The average pension continues to be exempt from tax. The VAT on accommodation services will remain at 9 per cent, and the planned rise to 14 per cent will be cancelled. The half-percent lowering of the social tax will be cancelled.
The amendments will reduce the excise duty rates for the main fuels and harmonise the excise duty rates for gaseous fuels. The rise of the excise duty rate for diesel fuel planned for 2018 will be cancelled. There is also a plan to postpone the rise of fuel excise duty rates planned for 2017 to the beginning of February, instead of the beginning of January. The excise duty rate for natural gas is planned to be raised by 25 per cent in 2018-2020.
There are also plans to additionally raise the excise duty rates for low-alcohol beverages – beer, cider and wine.
The benefit for families with many children paid to families raising three to six children is planned to be raised to 300 euro per month, and the benefit for families with seven or more children will be raised to 400 euro per month.
At Wednesday’s sitting, Chairman of the Finance Committee Mihhail Stalnuhhin introduced the 157 motions to amend the Bill that had been submitted after the sitting of the Riigikogu on 7 December when the second reading of the Bill had been suspended.
The provisions relating to the taxation of automobiles were omitted from the Bill. Provisions relating to private health insurance have been introduced into the Bill. An amendment will enable employers to compensate also private health insurance in the future.
The possibility of joint declaration of income of spouses will be retained in the case of housing loan interests, training expenses and the increased basic exemption for children. The limits for voluntary deductions will apply individually. This means that the taxpayer can deduct from his or her taxable income the training expenses incurred, housing loan interests paid and donations made in the taxation period to the extent of up to 1200 euro but not more than 50 per cent of the taxable income. If deductions exceed these limits, the taxpayer can transfer the unused part of training expenses and housing loan interests to his or her spouse, who can deduct them from his or her taxable income, keeping in mind that, together with his or her own deductions, they must not exceed the above-mentioned limits either. The limits will not apply with regard to increased basic exemption relating to maintenance of children which is only limited by the amount of taxable income.
The Riigikogu passed three Acts:
The Act on Amendments to the Penal Code and Amendments to Other Associated Acts (transposition of the directive on the freezing and confiscation of instrumentalities and proceeds of crime) (308 SE), initiated by the Government, transposes the directive on the freezing and confiscation of instrumentalities and proceeds of crime which provides for the relevant minimum requirements in the European Union.
The aim of the directive is to enhance confiscation of proceeds of crime. The deadline for the transposition of the directive was 4 October 2016.
The current procedure relating to property associated with an offence will become stricter in Estonia. For example, anything additionally obtained or earned with property derived from criminal activity is included in property obtained from an offence. In comparison to the earlier procedure, more property will be subject to confiscation. In the case of an offence, for example, in the future, the car used to flee can also be confiscated.
In addition to the transposition of the directive, the procedure relating to evidence, confiscated property and found items is organised. Among other things, the Tax and Customs Board or the Police and Border Guard Board will be designated as the authorised administrator of confiscated property depending upon the type of confiscated property or the body conducting proceedings in the offence. Earlier, county governments administered such property.
The Act also increases the flexibility in finding the most useful application for confiscated property in the society. The current Act restricts the possibilities of the state to use confiscated property only to transfer and destruction.
According to the Act, in the future, it will be possible to find the most suitable use for confiscated property, for example, to put it to use for social or educational purposes. The current Act does not regulate the realisation of property that has remained in the custody of the state due to lack of interest by owner, and it obligates the depositaries of items to preserve all found items regardless of the state of the items or the possibilities to use them.
The Act creates the possibility to destroy a thing if depositing it is excessively costly, if it has no commercial value and if it is impossible to sell it in the existing form.
The Act also enables the state to transfer or destroy evidence if the legal possessor of the evidence has not reclaimed it within six months after becoming aware of the decision on return.
87 members of the Riigikogu voted in favour of the Act.
The Act on Amendments to the State Legal Aid Act and Other Acts (299 SE), initiated by the Government, regulates the availability of legal counselling in more detail. The procedure for the competition for state legal aid is changed. In the future, a contract will be concluded with the winner of the competition for up to five years. In the current procedure, there is no time limit, but in practice, an agreement is concluded for one or two years.
According to the current procedure, support can only be given to non-profit associations or foundations. According to the Act, it will be possible to give it to all legal persons, for example law offices.
The Ministry of Justice exercises supervision over the service. If a criminal offence in the second degree can be resolved in alternative proceedings and the suspect does not request the appointment of a counsel, the state no longer has to appoint a counsel.
It is provided that people to whom a representative is appointed without their application in proceedings on petition in a civil matter are released from the obligation to compensate for the state legal aid expenses.
Higher than usual additional remuneration of the chairman of Viru County Court is provided for to motivate the judges in the permanent service of other courts to stand as candidates for chairman of Viru County Court. The state register of state and local government authorities will be taken to the information system platform of the commercial register.
Külliki Kübarsepp from the Free Party Faction, Valdo Randpere from the Reform Party Faction and Mart Helme from the Estonian Conservative People’s Party Faction, who took the floor in the debate, called on not to support the Bill.
Oudekki Loone from the Centre Party Faction and Raivo Aeg from the Pro Patria and Res Publica Union Faction supported this Bill.
53 members of the Riigikogu voted in favour of the Act and 36 were against.
The Act on Amendments to the Accounting Act (259 SE), initiated by the Government, regulates the use of electronic invoices in the public sector and amends the requirements for accounting source documents.
According to the Act, electronic invoice is an invoice which is handled electronically – the invoice is transmitted from one accounting software directly to another via an operator, and the recipient does not need to enter the data of the invoice manually.
When the Act was initiated, it also provided for an obligation that, starting from 1 January 2017, invoices submitted to the public sector would have to be electronic invoices both upon selling goods and providing services. This obligation was eliminated in the second reading of the Act and, under the Act that was adopted, the principle of voluntariness applies – undertakings have the option to submit electronic invoices if they so wish. As of 1 July 2017, electronic invoices submitted have to comply with the guidelines or the European standard. The public sector has the obligation to accept machine-readable invoices if somebody wishes to submit such invoices as of 1 March 2017.
Transition to e-invoicing will mean a saving for the public sector. Therefore, the Ministry of Finance is continuing work towards making electronic invoices compulsory, and is looking for solutions that would not burden the private sector excessively and would enable different business softwares to forward and receive electronic invoices without the intermediation of an operator. To ensure smooth transition to e-invoicing, the state allows micro, small and medium-sized enterprises to use the web-based software of the Centre of Registers and Information Systems for generation and transmission of electronic invoices free of charge in 2017–2018.
The Act amends the requirements for the accounting source document, such as contracts, receipts, acts and delivery notes, to simplify the generation thereof and to avoid presentation of unnecessary data.
The mandatory requirements for the source document include only the date, substance and figures of the business transaction. Additional requirements apply only to invoices submitted between accounting entities, for example, sales invoices between two undertakings.
90 members of the Riigikogu voted in favour of the Act.
The Riigikogu passed two Resolutions:
The Resolution of the Riigikogu “Amendment of the Resolution of the Riigikogu “Formation of the Anti-Corruption Select Committee”” (348 OE), submitted by the Centre Party Faction, provides for the appointment of Anneli Ott as a member of the Select Committee instead of Jaanus Karilaid, and Marko Shorin as a substitute member instead of Kersti Sarapuu.
Three motions to amend the draft Resolution had been submitted. The first motion to amend provides for the appointment of Mart Helme as a member of the Select Committee instead of Raivo Põldaru, and Martin Helme as a substitute member instead of Arno Sild. The second motion to amend appoints Kalle Muuli as a member of the Select Committee and Priit Sibul as a substitute member. The third motion to amend provides for the appointment of Kalle Muuli as a member of the Select Committee instead of Raivo Aeg, and Priit Sibul as a substitute member instead of Kalle Muuli.
83 members of the Riigikogu voted in favour of the Resolution.
The Resolution of the Riigikogu “Appointment of Members of the Estonian Public Broadcasting Council from among Members of the Riigikogu” (349 OE), submitted by the Cultural Affairs Committee, provides for appointment of Kalvi Kõva as a member of the Council instead of Andres Anvelt, Marika Tuus-Laul instead of Enn Eesmaa, and Viktoria Ladõnskaja instead of Kalle Muuli.
78 members of the Riigikogu voted in favour of the Resolution, and there were five abstentions.
One Bill passed the first reading in the Riigikogu:
The Bill on Amendments to the Health Services Organisation Act (318 SE), initiated by the Government, will amend the Health Services Organisation Act in connection with automatic registration of new-born children into the practice lists of family physicians and giving medical students access to the health information system.
The Bill also specifies the provisions of the Health Services Organisation Act that regulate the disclosure of information and exchange of information between the general medical care service providers and the Health Board. The need to specify them has become apparent during the activities of the Health Board in the organisation of general medical care since 1 January 2013.
As the proceedings on the agenda items included in the agenda were concluded during the regular session, there are no extraordinary sittings on 16 and 17 December.
After the sitting, Santa Claus visited the members of the Riigikogu.
Photos of the visit of Santa Claus (photos will be uploaded with a delay)
Verbatim record of the sitting (in Estonian) http://stenogrammid.riigikogu.ee/en/201612151000
Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu (NB! The recording will be uploaded with a delay.)
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